Costco takes members-only retail battle to Queensland

After setting up shop in New South Wales and Victoria, Costco is set to bring the big box retail battle to Queensland with the opening of a warehouse store in North Lakes, north of Brisbane.

Costco currently has three stores open on the eastern seaboard — in Docklands (Melbourne), Auburn (Sydney) and at the Canberra Airport — and has a further two stores opening next month in Ringwood (east Melbourne) and Crossroads (south-west Sydney).

While no official opening date has been set for the North Lakes stores, Current.com.au understands it is expected to be open by “mid-2014”.

Located roughly 25 kilometres north of the Brisbane CBD, North Lakes is no stranger to big box retailers — the suburb has its own Masters and Bunnings warehouses, as well as a Westfield shopping centre in the suburb’s south.

Costco’s move north has been a long time in the works, with country manager Patrick Noone saying in February 2012 that the company ‘liked’ the market in Queensland and was hoping to have a site in the state by this year.

The move by a membership-based retailer such as Costco into Queensland will bring greater competition to Metcash’s membership-only retailers, Value Depot and Campbells Wholesale.

At the time, Metcash signalled that it planned to rebrand at least some of its 18 existing Campbells Cash and Carry stores to the Value Depot format; however, almost one year on only the initial Brisbane store carries the Value Depot branding. There are five other Campbells Wholesale stores in Queensland, spread from the Gold Coast up to Cairns.

Although Value Depot and Campbells Wholesale membership is only open to small-to-large business customers with an ABN, the other elements of the two businesses are similar to Costco’s value proposition: bulk offerings of merchandise in a no-frills environment, with a spread of products across dry groceries, fresh food and appliances.

While Value Depot and Campbells Wholesale are targeted at business customers exclusively, Costco also offers business memberships to its stores (alongside consumer memberships) and the bulk product offerings are also suited to small business owners. However, unlike Value Depot which offers free membership, Costco membership is $55 for businesses (or $60 for the general public).

Since launching in Australia at Docklands, Costco has shown no signs of slowing down its store openings, with a steady but measured expansion across key sites in the east of Australia. With Masters, Bunnings and Costco all vying for consumer spend in North Lakes alone and Value Depot a half hour drive to the south, next to the Brisbane airport, the big box retail battle could be just beginning.